Trump’s DOE tries to pick “winners”

October 25, 2017 by Denis Pombriant

There’s a disappointing story in the New York Times today about how Donald Trump’s DOE (Department of Energy), under former Texas governor and sometime presidential candidate, Rick Perry, is lending disproportionate support to the coal industry.

“Rick Perry’s Anti-Market Plan to Help Coal” by Jody Freeman and Joseph Goffman shows how Perry is attempting to subsidize coal. According to the article, Perry,

Asked the Federal Energy Regulatory Commission — the independent agency that regulates electricity markets — to adopt a new rule to pay certain coal and nuclear plants more than they would otherwise earn in a competitive market. In essence, consumers would pay these plants a premium for electricity that competitors could produce, and are already producing, more cheaply.

Perry’s specious argument, which has been debunked by his own DOE, which he leads, is that coal and nuclear plants stockpile fuel and are therefore more resilient to disasters than other forms of energy. But by that logic, geothermal energy production, which relies on heat from the earth, should outcompete both. After all, earth’s core has been molten at about 5500 degrees Fahrenheit since, well, I was going to say since the earth cooled but that hasn’t happened yet and it’s been 4.5 billion years already, but you get my drift. The reality is that coal plants are being mothballed because natural gas derived from hydraulic fracturing or “fracking” has become abundant and cheap and it now dominates and DOE wants to save coal.

But coal is on a one way trip to palookaville regardless of what DOE does. In “The Age of Sustainability,” I quote DOE information that shows coal’s decline and the rise of alternatives and greener solutions.

A total of 94 coal-fired power plants closed in 2015, representing a capacity of 13.556 GW). The coal-fired generating units retired in 2015 were older and had smaller capacities than the coal-generation fleet that continues to operate. In 2016, another 41 coal plants were scheduled to close with a combined net summer capacity of 5,326.5 MW.

This demonstrates how hard it is to reduce carbon pollution. These coal plants have small capacities averaging less than 150 MW each. Compare that to the combined US generating capacity of 1.1 Terra Watts.

By changing the rules, Perry wants to stifle fair competition based on letting markets set prices. His proposal would take electricity production back to a time when producers could base their rates on production costs plus a reasonable return on investment. The trouble with that approach is that it prevents free market competition from working its magic of inducing producers to improve products, services, and to lower their prices.

To get his way Perry will have to convince FERC commissioners that he’s right, a dubious proposition but one that can’t be dismissed outright in these confused times. As I make plain in “The Age of Sustainability” cleaning up the environment and producing clean energy isn’t about science, it’s mostly economics and now we have to add the fact of politics.

Not long ago it was the GOP criticizing President Obama for investing in green technologies of the future. Let the free market decide was the oft cited cry. Indeed.